Data published by the Office for National Statistics (ONS) showed that retail sales declined by 3.2% in December, offsetting the November increase (+1.4%, revised from +1.3%), and recording the largest decline since January 2021. Economists had expected a decline of only 0.5%. For the three-month period (through December), sales volumes fell by 0.9% when compared with the previous three months. Meanwhile, retail sales excluding fuel fell by 3.3% after a 1.5% increase in November (revised from +1.3%). Consensus estimates suggested a 0.6% drop.
The data also showed that, in annual terms, retail sales fell by 2.4% in December, offsetting the November increase (+0.2%, revised from +0.1%). Economists had expected growth of 1.1%. On an annual basis, sales volumes fell by 2.8% in 2023 and were their lowest level since 2018.
The ONS said food stores sales volumes fell by 3.1% (compared to +1.1% in November), while non-food stores sales volumes declined by 3.9% after rising 2.7% in November, partly due to consumers purchasing gifts earlier than usual in November. Automotive fuel sales volumes fell by 1.9% in December, offsetting the November increase (+0.8%). The data also showed that non-store retailing (predominantly online retailers) sales volumes fell by 2.1%, accelerating compared to November (-1.1%). Retailers reported economic factors behind the fall, in particular the effect of inflation. The proportion of online sales was 27.1% compared to 26.6% in November. The proportion of online sales is slightly above the average of the preceding 12 months (26.5%) and substantially above pre-coronavirus pandemic levels (19.7% in February 2020).